ARRC previously issued a press release when the frequently asked questions were initially published on September 20, 2018. The ARRC has since updated this document on an ongoing basis.
To promote broader engagement on the proposal, the ARRC released a webinar in April 2020 that provided an in-depth overview of the draft legislation. The ARRC also set out key legislative principles related to its work on legislative solutions which is reflected in Attachment 1 of the October 21, 2020 ARRC meeting minutes.
Submitting Responses to the RFP
Questions and responses to the RFP should be sent to the ARRC Secretariat at email@example.com by October 31, 2020. Please provide only one response per institution, and please attach your responses in a PDF document with "Forward-Looking Term Rates RFP Response" clearly indicated in the subject line of your email.
The ARRC will evaluate responses and will require selected firms to present their proposals. Following an ARRC selection, the ARRC will publish the name of the chosen recommended administrator. The recommended administrator must be prepared to begin publication of the forward-looking term rates by June 30, 2021.
Questions and responses to the RFP should be sent to the ARRC Secretariat at firstname.lastname@example.org by October 16, 2020. Please provide only one response per institution, and please attach your responses in a PDF document with "Spread Adjustment RFP Response" clearly indicated in the subject line of your email.
The ARRC will evaluate responses and will require selected firms to present their proposals. Following an ARRC selection, the ARRC will publish the name(s) of the chosen administrator(s) .
In making a recommendation, the ARRC incorporated feedback received on its public consultation on this matter, which received responses from more than 30 sell-side and buy-side market participants.
They were adjusted in September 2020 following the publication of updates to bilateral business loan fallback language. In order to reflect that publication, the ARRC has updated its Best Practice recommendations to state that new bilateral business loans should incorporate hardwired or hedged fallback language by October 31, 2020. The recommendation for new syndicated business loans to incorporate hardwired fallback language by September 30, 2020 remains unchanged.
The Best Practices also include an accompanying fact sheet.
The ARRC released guides to support the transition away from USD LIBOR. The LIBOR ARM Transition Resource Guide focuses on LIBOR-based adjustable rate mortgages, including home equity products. The Legacy LIBOR-Based Private Student Loan Transition Resource Guide focuses on LIBOR-based variable rate private student loans that will exist after LIBOR's anticipated discontinuance after end-2021.
ARRC Chair Tom Wipf sent a letter to ARRC Members urging them to be prepared to sign onto the International Swaps and Derivatives Association's (ISDA) IBOR Fallback Protocol, consistent with the ARRC's recommended Best Practices. Adherents to the Protocol will agree that existing derivative transactions that they have entered into with other adherents will incorporate ISDA's new fallback language.
The released the SOFR Starter Kit, a set of factsheets to inform the public about the transition away from USD LIBOR to SOFR. The SOFR Starter Kit aims to help anyone impacted by the transition quickly familiarize themselves with the history and core issues involved in transitioning. It is segmented into three parts:
The ARRC has filed a letter with the CFTC's Division of Clearing and Risk (DCR), Division of Market Oversight (DMO), and Division of Swap Dealer and Intermediary Oversight (DSIO) requesting modifications to the existing IBOR no-action relief previously granted by such divisions in CFTC Letters 19-26, 19-27 and 19-28. These requests are summarized in an issues list (the ARRC Issues List) submitted along with the letter.
While the ARRC believes the existing no-action letters address many of the regulatory issues in the transition, certain modifications have been requested to further ensure a smooth and orderly transition away from LIBOR and other IBORs. One of these requests for DCR—regarding the rates covered by the DCR no-action letter—is an important clarification required for the ISDA 2020 IBOR Fallbacks Protocol, which will facilitate the amendment of swaps to include "Fallback Amendments."
The ARRC previously submitted a letter requesting that DSIO modify its relief to address the implications of certain discount rate changes at derivatives clearing organizations, as well as amendments to credit support annexes. The ARRC continues to request these modifications, which are reiterated in the ARRC Issues List.
(i) grant no-action relief providing that the exchange of voluntary compensation for a swaption, or the amendment of a swaption's terms to reflect an agreement regarding the discount rate that will be used by a derivatives clearing organization ("DCO") in advance of the DCO's discounting changes would be treated as a "Qualifying Amendment" under DSIO's existing IBOR relief letter (CFTC Letter 19-26) and that therefore such actions would not result in the swap being newly subject to the regulatory requirements covered by CFTC letter 19-26; and
(ii) clarify that CSA amendments would not trigger the regulatory requirements covered by CFTC letter 19-26.
The ARRC recently released recommendations for swaptions affected by the CCP discounting transition to SOFR. Among other actions, the ARRC recommended that market participants amend their legacy swaptions to bring them in scope for ISDA Supplement 64. Additionally, as part of its Best Practice recommendations, the ARRC recommended that market participants amend interdealer CSAs to use SOFR for U.S. dollar collateral by the end of this year.
The ARRC is cognizant that the desire for clarity around related regulatory impacts may be a factor impacting the ability of market participants to agree to an amendment of their swaption positions or of their CSA. In order to achieve this clarity, the ARRC has requested that the CFTC consider these actions.
The ARRC continues to take in responses to Section I of the survey and encourages more vendors to respond.
As noted in the letter that accompanies the survey, the ARRC asks vendors to input responses to Section I in the spreadsheet, and submit the spreadsheet by email to the ARRC Secretariat (email@example.com). Please do not submit any responses to Section II. Indicate "Vendor Survey" in the subject line of your email, and provide only one response per institution.
ARRC representatives hosted a webcast on Monday, February 10, 2020 to answer vendors' questions. A recording of the webcast can be viewed via this link.
Submitting Feedback About This Consultation
The ARRC welcomes responses to the supplemental consultation from the widest possible range of stakeholders. The release of the consultation marks the start of a public comment period during which the ARRC intends to work closely with stakeholders to solicit and incorporate their input. Following this comment period, the ARRC will release a more detailed final recommendation of the spread adjustment methodology for cash products.
Market participants may submit responses to the consultation questions by email to the ARRC Secretariat (firstname.lastname@example.org) no later than June 8, 2020. Please provide only one response per institution, and please attach your responses in a PDF document with "Supplemental Consultation Response" clearly indicated in the subject line of your email. Comments will be posted on the ARRC's website as they are received without alternation, expect when necessary for technical reasons, and with attribution, unless respondents request anonymity. If your institution is requesting anonymity, please clearly indicate this in the body of your email and please ensure that the PDF document you submit is anonymized.
Questions regarding the consultation should be sent to the ARRC Secretariat (email@example.com) and will not be posted for attribution.
Submitting Feedback about Consultations
The ARRC is seeking feedback on each proposed approach and on the key issues involved from the widest possible range of stakeholders. The release of these consultations marks the start of a public comment period, during which the ARRC intends to work closely with stakeholders in these markets, including issuers, intermediaries, and end users, to solicit and incorporate their input. The consultations include multiple questions about each aspect of the potential fallback provisions.
Comments should be sent to the ARRC Secretariat (firstname.lastname@example.org) no later than May 15, 2020. Comments will be posted on the ARRC’s website after the close of the consultation period without alteration except when necessary for technical reasons. Comments will be posted with attribution unless respondents request anonymity. If your institution is requesting anonymity, please clearly indicate this in the body of your email and please ensure that the PDF document you submit is anonymized. Questions regarding the consultations should also be sent to the ARRC Secretariat (email@example.com) and will not be posted for attribution.